Sunday, October 5, 2008

I sat down with RSL President Bill Manning and we discussed what the opening of Rio Tinto Stadium means to the team from a business perspective. We also discussed a few miscellaneous topics as well. Note that the comments below are summarized, and only include direct quotes where indicated.

GENERAL THOUGHTS

On what the opening of Rio Tinto means to the team: To the team, it's their home and their lockerroom. This has a big impact. The players are excited. In fact, we are set to do a walk-through with them and their spouses, and several have mentioned that they are excited about this.

On what the opening of Rio Tinto means to the league: It's another step to credibility and to accomplishing their business model. It's another step to being successful.

On the stadium being a recruiting tool: It will help alot with prospective players, but we have found it very helpful with prospective season ticket holders. The best tool we have is to have them come down and take a tour of the stadium. It has such an impact. The next step for us is a practice field.

On how this compares to other stadiums: It's an evolution. It started with Crew stadium and every time they get better and better. People will walk into this stadium and say that it's the best facility in the country. It will be interesting to see what happens with the New York Red Bulls stadium.

On the profile of soccer stadiums at 20,000 capacity: This does have some expansion capability, but we'll worry about that when we have this thing consistently full. There's also something to be said for building up some scarcity and demand.

On the completion of the stadium: It's on time and on-budget which is somewhat rare for a project like this. We did have to chip in a couple of bucks to get it done early for this ESPN game.

FINANCIAL IMPACT

On what this means to the long-term health of the team: "Without it we would not have survived." This stadium allows us to prosper as a business.

On how this relates to a DP: This stadium should allow for us to generate revenue that makes a DP more possible. This probably won't happen next year, but 2010 is a real possibility.

On a Mexican international as DP: About 1/3rd of our fans are hispanic. About 95% of these are Mexican. If we could get a Mexican International who can play at a high-level this would be a great mix for us.

On the 3-fold increase in revenue reported in Forbes: Yeah, we should be able to do something in that ball-park. Remember that the parent company to RSL includes the radio station, the team and this stadium. There will be other events at this stadium that will be benefit the parent company, and this will also help the soccer side.

On additional revenue streams: ticket revenue and sponsorships are the main ones, but there is also merchandising and concessions with a small amount of parking as well. Season tickets is the key. We are going to nearly double our season ticket revenue next year. Building that base is the key. The worst thing in the world for soccer is to count on the walkup.

On the report of profitability next year: We are probably more than a year away. , there are alot of expenses. It may allow us to come close to break-even in the next year or so, and to begin to run a good business. It takes alot of hard-work. I'm still learning this market, but we'll get there.

TICKETS AND PRICING

On Season Tickets: One of the thing's that has burnt soccer in the past is giving away tickets. It just devalues the tickets eventually. I think people are saying if you give us this stadium we are willing to pay for tickets. We are 30% higher for season tickets from last year, and we'll probably be 70-80% higher before the start of next season.

On ticket pricing: Ticket pricing hasn't really gone up across the board. It's the high-end that has gone up. We think fans will pay for value. So we figured the 50-yard line, and club seats - fans will pay for that. But we also have to have affordable pricing. It's interesting that the ones that have sold the best have been the high-end and the low-end. The middle price points are the last to sell.

Single Game Pricing:

Category

Price

Club 1750

$125

Club 1500

$100

Club 1250

$75

Stadium Seating

$60

Lower Sideline

$30

Corners

$25

Supporter's Section

$20

KFC Colonels Corner

$20

North Goal

$18

Upper Deck

$15

On how the price points were set: "I looked at the Jazz, I looked at our prior pricing. We then sat back and asked ourselves what prices we thought would not be an insult to the fans, but something that they could absorb. My task is to drive revenues. What can we do to drive revenues? We said the front-row is a great asset, so we premium-priced them." I think we are the first ones to do this.

On the high prices of the premium seats: A fair question, but if they were priced too high they wouldn't sell. We have 900 seats and we have sold 724. I reserved 150, and the other 20 or so they currently have holds on them.

On the center-circle seats: "I was a little nervous about that one, because that's an NFL price." What we have found is that there is money in this market. We have 96 seats and we have sold 60 so far. They get a road trip to Colorado with the team. They'll walk out the same tunnel with the team. They have their own club with food and beverage. I can't say I was 100% sure that they would sell, but it's a good revenue stream.

On the demographic of season-ticket holders: We have affluent and suburban families. We have alot of season ticket holders from Salt Lake City. About 1/3rd of our fan base is hispanic. And there is a group of 18-28 year olds who are single and have played soccer. Alot of them are in the supporters groups, and are looking for the $300/year tickets. We also have seen more season tickets this year from companies, and then tend to be less price-point conscious.

On marketing ticket sales: We have not yet aggressively marketed these, except for to our current ticket holders, but we will do this. We will have a targeted marketing approach. A "rifle" approach, as opposed to a "shotgun" approach. We have also setup four ticket units: hispanic sales, corporate sales, soccer sales, and affinity sales for everyone else. We also have a premium services group for premium ticket holders and suites. We now have 18 in our ticket sales staff. The average in MLS is 11.

SPONSORSHIPS

The Salt Lake Tribune has reported on the status of stadium sponsors. Please note that the terms of the naming rights by Rio Tinto has commonly been reported as $1.5-2M per year for 15 years. My research indicates that it is more likely $1.5M for 10 years, and Bill Manning seemed to indicate that many of the reports were too high.

On the importance of naming rights: It's very critical.

On the naming rights deal: We are competitive everywhere, except the Home Depot Center. For our market, I think we did really well for ourselves, and we got a great partner in Rio Tinto.

On Rio Tinto: For us to have them as a partner is flattering. It's a game changer.

On why Rio Tinto was interested: It's all about community. They are going through a re-branding in this market, and what better re-branding tool than the stadium. They are also very community conscious, and expecially focused on the youth in this community.

On sponsorships in general: if we can get to where we want to be we'll be in the top 3 in MLS. And we are well on our way. We are already almost double last year, and we still have 7 months until next season. And we have alot of companies that we are talking to.

MISCELLANEOUS

On hosting other soccer events: I would really like to see us become a consistent destination for the US national team, both men's and women's. We would definitely have a pro-American crowd. We could also host the NCAA championships.

On the number of events needed to make the numbers work: We'll have 4 or 5 quality concerts. We want to have around 40 events each year including RSL. You also have to worry about the field, so we don't want to have 80 events.

On a Real Madrid Academy: It is something we want to put in place at some point, but it hasn’t been as high of a priority as getting this stadium opened and then getting a practice field. We see value in that academy. And that’s part of youth development. We do plan on having a couple of RSL youth teams next year. The ultimate goal is to have a place where we can recruit kids to come from around the US and the World and play soccer and be part of our system. But that’s going to take a while. Where Garth and I are talking a lot about is having three tiers. We are talking to the folks in the PDL and aligning with them: maybe having a U-17, U-18 team and maybe a U-23 team.

On the festivities for the opener: Let's just say that it's going to be a very patriotic night. We'll have the National Guard in full force. It's my recognition for them and what they do for our country and our state.